Is there a dominant strategy for minimizing tax and 409A impact or does it depend on the company when helping companies find the optimal balance?

What it comes down to is your tax impact, your 409A impact, are on the opposite sides of the field. If you want to have optimal tax situations for your employees, you will want to structure it as a non-compensatory transaction. Like it's not compensation. You can structure it so that it looks like it's compensation or you can structure it so  you're completely hands off, this is just your market transaction, the company has minimal involvement and that's a non-compensatory transaction. If it's a non-compensatory transaction, then it's more of an accurate market price of your stock and so it will have a larger impact against your 409A. So companies that want to optimize for tax withholdings and to be subject to potential longterm capital gains, they're going to have a larger hit to their 409A. And so there are things that we can do to minimize that impact, it's how frequent you're transacting, how large the transactions are, and there's other ways that we can optimize. But really you're at two opposite ends in the field. If you want tax benefits, which we think are probably the most important thing for late stage companies -- once you're public, your share price is going to trade, your 409A goes out the door anyways, like your trading price ends up becoming the price at which you issue shares to your employees. So if you're thinking about being public anyways, you shouldn't care that much about your 409A, you should just go and trade your stock and then get the tax benefits for your employees. 

For those earlier stage companies, maybe the younger unicorns that I mentioned, they still want to keep their 409A price as low as possible, and so for them, they want to structure it as more of a  compensation transaction. If it's compensation, then an argument will be made that it's not an efficient market, it will have less of an impact on your 409A. And so the way to structure it as more of a compensatory transaction is to keep it insiders only. If only existing shareholders can buy, existing investors, then it's going to be deemed as compensation. If only employees can sell and ex-employees and investors can't sell, it's gonna look more like compensation. So there's a lot of different ways that we can optimize these transactions, but those two things are usually at opposite ends of the spectrum.

We think that the more mature you are, the more you should be interested in having optimal tax benefits for your employees, the younger you are, the more interested you are in  having minimal impacts against your 409A, but at the end of the day, the difference is the seller. I can tell you this right now, the difference between paying ordinary income tax versus potentially getting longterm capital gains tax is significant. Like I don't want to play ordinary income. And I think that optimizing for tax benefits is the right thing to do for your shareholders, your existing shareholders that are at the company. Your 409A, keeping that low, that's more for perspective employees. But I think the benefit of offering a liquidity program will be more impactful than the 409A price. The benefits of having lower 409A, like having liquid stock means your stock is going to be worth more to somebody than if your stock is illiquid and you have a better 409A price, so cheaper stock getting in. If it's illiquid,  your 409A price doesn't matter.